Treasury officials could have avoided the explosive controversy over American International Group bonuses if they had carefully examined the company’s compensation system, government investigators reported.

American International Group Inc. Chief Executive Officer Robert Benmosche was rebuffed by the insurer’s board after saying he should be allowed personal use of the bailed-out company’s aircraft, according to two people familiar with the matter.

The August 20, 2009 article by Reuter’s journalist Lilla Zill (“AIG chief’s salary structured to reflect risk“) says “AIG, the bailed out insurer whose pay practices sparked outrage earlier this year … said it will pay Benmosche, who became CEO on August 10, a salary of $3 million in cash and $4 million in fully vested stock. He also could receive a bonus valued as high as $3.5 million.”

AIG, the bailed out insurer whose pay practices sparked outrage earlier this year, has agreed to a $10.5 million pay package for its new CEO — a stark contrast to his predecessor’s $1 pay but drawing zero outcry from politicians or regulators.

In an April 4, 2009 article in the New York Times, “Big Bonuses at Fannie and Freddie Draw Fire”, Times journalist Charles Duhigg reports that
“…the two troubled companies at the heart of the nation’s mortgage market, are set to pay [7,600] employees “retention bonuses” totaling $210 million, despite [criticism and] calls from [some] lawmakers to cancel the payments.’ Duhigg further states, “Similar bonuses paid by the American International Group, which was also bailed out by taxpayers, incited fiery attacks from the White House and legislators when they were revealed last month.”

So are these situations, one with Freddie and Fannie and the other with AIG, the same or different? Should we permit taxpayer dollars to be used for bonus payments for any of the “bailed out” companies? Should government stay out of it, and leave the business decisions to business leaders?

Published in International Business Times, April 9, 2009 by Robert Solomon.

The issue of executive pay has resurfaced again in the wake of questionable AIG bonuses, and exorbitant compensation packages for banking executives. Pundits see the problem largely as a consequence of a lack of independence among boards of directors.

Fannie Mae and Freddie Mac, the two troubled companies at the heart of the nation’s mortgage market, are set to pay their employees ‘retention bonuses’ totaling $210 million, despite calls from lawmakers to cancel the payment.

The bonuses, which were made public on Friday, were defended by the companies’ federal regulator, James B. Lockhart, who said he intended to let them proceed.